Correlation Between HUMANA and Intact Financial

Can any of the company-specific risk be diversified away by investing in both HUMANA and Intact Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining HUMANA and Intact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HUMANA INC and Intact Financial, you can compare the effects of market volatilities on HUMANA and Intact Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in HUMANA with a short position of Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Intact Financial.

Diversification Opportunities for HUMANA and Intact Financial

-0.45

Correlation Coefficient

HUMANA  Intact Financial

Very good diversification

The 3 months correlation between HUMANA and Intact is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Intact Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intact Financial and HUMANA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on HUMANA INC are associated (or correlated) with Intact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intact Financial has no effect on the direction of HUMANA i.e., HUMANA and Intact Financial go up and down completely randomly.

Pair Corralation between HUMANA and Intact Financial

Assuming the 90 days trading horizon HUMANA is expected to generate 61.84 times less return on investment than Intact Financial. But when comparing it to its historical volatility, HUMANA INC is 1.67 times less risky than Intact Financial. It trades about 0.0 of its potential returns per unit of risk. Intact Financial is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  14,071  in Intact Financial on September 12, 2024 and sell it today you would earn a total of  5,075  from holding Intact Financial or generate 36.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	85.14%
Values	Daily Returns

HUMANA INC  vs.  Intact Financial

HUMANA INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUMANA INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HUMANA INC investors.

Intact Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Intact Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HUMANA and Intact Financial

The main advantage of trading using opposite HUMANA and Intact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, Intact Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Intact Financial will offset losses from the drop in Intact Financial's long position.

The idea behind HUMANA INC and Intact Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.